Economic Crime and Corporate Transparency Bill - Report Stage Preview

While not containing any tax changes this Bill does include measures relevant to tax professionals, on areas such as anti-money laundering requirements, information sharing and company and partnership reporting obligations. 

You can get up to speed on what happened during the Bill's committee stage - when many of the same amendments and new clauses were discussed - with our summary here.

Below is a list of the amendments and new clauses tabled for debate as of 22 January. They are grouped by the part of the Bill they appear to relate to as well as whether they are government or non-government (ie opposition or backbench) new clauses and amendments. Where a party is named this indicates that the new clause or amendment has been tabled by the relevant party spokespeople. Where party spokespeople are among the sponsors of a new clause or amendment that has cross-party support it is listed as a cross-party amendment. Amendments or new clauses listed as cross-party have the support of MPs from a minimum of three parties including in all cases at least one Conservative.

The full text of all amendments and new clauses tabled to date is available here. Any update will be available under the Amendment Paper drop down menu here.

Government new clauses and amendments are expected to pass. Opposition and back bench new clauses and amendments rarely pass, though strong cross-party support including Conservative sponsors gives them a better chance.

After third reading the Bill will pass to the Lords where, unlike with tax legislation, there will be the opportunity for peers to amend the Bill. With no government majority in the Lords It is likely peers will vote to strengthen the Bill in some respects, beyond the Government’s wishes. Amendments of course need to be accepted by both Houses to become law.

Tuesday 24 January – New clauses, schedules and amendments relating to parts 1, 2 and 3

There are a significant number of government amendments and new clauses related to Parts One and Two of the Bill – reforms related to registration and regulation of companies and their directors, and of partnerships. These include reducing the scope for exemptions to some of the provisions in the Bill, and a greater role for Scottish and Northern Irish governments. These do not look likely to be controversial.

Debate is likely to focus on the cross-party new clauses and amendments relating to Part One of the Bill. Of particular note are new clause 20 which would raise the cost of incorporating a company (putting the proceeds into a fund to tackle economic crime), amendments 102 and 103, which would oblige the company registrar to carry out a risk assessment of the information they hold, and new clause 18, which would require any person holding 5% or more of the shares in a public company to declare this fact.

Government new clauses and amendments to Part One – Companies etc

NC8-11, amendments 7,8,15,16 (gov) - Disqualification for persistent breaches of companies legislation (GB and NI), and on summary conviction (GB and NI)
Amendments 7 and 8 leave out clauses 41 and 42 of the Bill. Amendments 15 and 16 leave out clauses 102 and 103 of the Bill. New clauses 8-11 replace these clauses and contains changes to ensure that a person can be disqualified from being a company director for breaches of obligations under Part 1 of the Economic Crime (Transparency and Enforcement) Act 2022 etc.

1,2,4,5,6,9,10,11,12,14,52,53,55 (gov) – amending clause 5, etc - These amendments remove the powers to exempt directors from identity verification requirements, and make consequential changes

3 (gov) – amending clause 20 - The registrar must place a note in the register of any decision to change a company name that contains computer code. It is implicit that the note forms part of the register. But section 1081(6) spells out the point expressly for some notes. The amendment extends it to cover all notes.

13 (gov) – amending clause 91 - Under new section 1110G of the Companies Act 2006 the registrar can only share information with a public authority or for purposes connected with the exercise of the registrar’s functions. The amendment confers a regulation-making power to authorise the registrar to disclose information to other people or for other purposes.

54 (gov) – amending schedule 2 - This amendment ensures that the wording of new section 167K(1)(e)(i) of the Companies Act 2006 is consistent with the opening words of that subsection.

56 (gov) – amending schedule 2 - This amendment ensures that the wording of new section 279K(1)(e)(i) of the Companies Act 2006 is consistent with the opening words of that subsection.

Government new clauses and amendments to Part Two - Partnerships

NC12 (gov) - A limited partnership’s registered office: consequential amendments
This new clause would mean that whether or not a limited partnership is an EEA AIF, Gibraltar AIF, UK AIF or established in the UK does not change solely because it complies with the new requirement introduced by clause 112 of the Bill to have a registered office in the UK.

NC13 (gov) - Removal of limited partnership from index of names
This new clause requires the registrar to remove a limited partnership from the index of names as soon as practicable following dissolution or deregistration. The registrar must place a note in the register when a limited partnership is so removed and publish a notice in the Gazette in certain circumstances.

17 (gov) – amending clause 108 - This amendment clarifies the relationship between being registered as a limited partnership under the LPA 1907 and being deregistered under new section 26 of that Act.

18 (gov) – amending clause 108 - This amendment makes the meaning of “limited partnership” in section 1099 of the Companies Act 2006 consistent with the meaning given by the LPA 1907.

19-27,33,40,41 (gov) – amending clause 117, etc - These amendments remove the powers to exempt the registered officer of a corporate general partner from identity verification requirements, and make consequential changes

28 (gov) – amending clause 127 - This amendment clarifies that the debts or obligations for which limited partners are not liable beyond their contribution includes debts or obligations incurred after dissolution under section 38 of the Partnership Act 1890.

29 (gov) – amending clause 127 - This amendment clarifies that the debts and obligations for which limited partners can become liable if they take part in the management of the partnership business includes debts and obligations incurred after dissolution under section 38 of the Partnership Act 1890.

30,31,32 (gov) – amending clauses 129 and 130 - These amendments allow the Scottish Ministers and the Northern Irish Department for the Economy to petition under new sections 27 and 28 of the LPA 1907 to wind up LPs in Scotland and Northern Ireland respectively. The Secretary of State must consult the Scottish Ministers or Department for the Economy when presenting petitions for those LPs.

34-37 (gov) – amending clause 133 - These amendments mean that after 20 years the registrar need not make available for public inspection records relating to a limited partnership that has been deregistered. Those records can also be moved to the relevant public record office after two years.

38 (gov) – amending clause 135 - This amendment requires notice of dissolution to be given within 14 days of a partner becoming aware that a limited partnership is dissolved. Notification is not required if the limited partnership is dissolved on publication of a dissolution notice or if a dissolution notice is subsequently published.

39 (gov) – amending clause 136 - This amendment makes it clear that a note of the date of revival of a limited partnership forms part of the register of limited partnerships.

42 (gov) – amending clause 143 - This amendment would mean that regulations made under new section 7A of the Limited Partnerships Act 1907 cannot consequentially amend Northern Ireland legislation.

43 (gov) – amending clause 147 - Clause 147(1)(b) confers power to require a partner of a qualifying Scottish partnership to have at least one managing officer who is either identity verified or exempt from identity verification. This amendment removes the power to make provision about exemption from identity verification.

Government new clauses and amendments relating to Parts One to Three of the Bill

NC15 (gov) - Reports on the implementation and operation of Parts 1 to 3
This new clause imposes a duty on the Secretary of State to prepare and lay before Parliament reports about the implementation and operation of Parts 1 to 3.

There are no government amendments or new clauses tabled relating to Part 3 of the Bill.

Opposition and backbench new clauses and amendments relating to Part One of the Bill (Companies etc)

Role of the registrar of companies

NC17 (cross-party, Simon Fell lead) - Checks on persons with significant control status
This new clause creates a duty on the registrar to check whether the person declared as the “person of significant control” (PSC) does indeed have significant control of a company, by cross checking company records, on a risk-based approach.

NC35 (SNP) - Supervisory functions of registrar
This new clause seeks to make the Registrar an AML supervisor in their own right.

102 (cross-party, Fell lead) – amending clause 89 - This amendment requires the registrar to carry out a risk assessment of the information it holds, and act on any matters of concern identified.

103 (cross-party, Fell lead) – amending clause 63 - This amendment creates an obligation on the registrar to carry out a risk assessment to establish whether the identity checks carried out by Authorised Corporate Service Providers (ACSPs) are accurate and valid.

104 (Lab) – amending clause 1 - This amendment would insert a fifth objective requiring the registrar to act proactively.

Company registrations

NC20 (cross-party, Margaret Hodge lead) - Fees and penalties
This new clause raises the fee to incorporate a company to £100 (amended annually for inflation), and requires the Secretary of State to report on the case for these fees, along with penalties received by the registrar, to be paid into a fund to be used for tackling economic crime.

NC34 (Lab) - Report on the authorisation of foreign corporate service providers
This new clause creates an obligation for the Secretary of State to publish a report into the number of Authorised Corporate Service Providers (ACSPs) with a head office based outside the United Kingdom and the number of foreign corporate service providers authorised by the regulations set out in new section 1098I(1) of the Companies Act 2006.

NC36 (SNP) - Integrity of the register
This new clause seeks to ensure that existing company registrations contain accurate, up to date information. It also imposes a requirement for the Registrar to update Parliament on the progress of updating the register.

Appointment and identification of company directors

NC22 (Lab) - Person convicted under National Minimum Wage Act not to be appointed as director
This new clause would disqualify any individual convicted of an offence for a serious breach of the National Minimum Wage Act 1998, such as a deliberate refusal to pay National Minimum Wage, from serving as a company director.

108 (Lab) – amending clause 62 - This amendment would add a requirement on ACSPs to confirm the individual they’re verifying has signed a confirmation statement stating whether they already have a unique ID on the register.

101 (cross-party, Fell lead) – amending clause 62 - This amendment would ensure that ACSPs are not authorised to carry out ID verification until the consultation on anti-money laundering supervision announced by the Government is completed and implemented.

105 and 106 (Lab) – amending clause 66 - Amendment 105 would ensure that all directors would be issued with a unique director identifier to be used for all their directorships. Amendment 106 would allow the registrar to link all unique identifiers to any other entries the person has on the register whether under the same name or a different name.

109 and 110 (SNP) – amending schedule 2 – Amendment 109 would require company directors to be given unique identification numbers. Amendment 110 would provide for penalties to apply to anyone failing to provide their unique identification number to the registrar.

111 (SNP) – amending schedule 2 – This would enable the registrar to refuse to register a director on grounds that they already hold an excessive number of directorships.

Dissolved companies and phoenixing

NC19 (cross-party, Fell lead) - Risk-based examination of accounts of dissolved companies
This new clause creates new duties for the registrar to examine the accounts of dissolved companies with a view to establish whether an economic crime has been committed, using a risk-based approach.

NC24 (Lab) - Application for administrative restoration to the register
This new clause would make it possible for a creditor or liquidator to apply to restore a company administratively.

NC37 (SNP) - Prevention of continued trading for companies repeatedly declared insolvent
This new clause seeks to prevent companies from repeatedly becoming insolvent and then continuing to carry on the same business activities through a new company (the practice of “phoenixing”).

112 (Con back bench, Andrea Leadsom lead) – amending clause 89 - This amendment would require the registrar to carry out checks aimed at identifying instances of “phoenixing”.

113 (Con back bench, Leadsom lead) – amending clause 90 - This amendment would require the Secretary of State to set the cost of incorporation at a level which would enable the registrar to carry out effectively checks aimed at identifying instances of “phoenixing” (see amendment 112).

Miscellaneous

NC16 (cross-party, Seema Malhotra lead) - Reporting requirement (objectives)
This new clause creates an obligation on the Secretary of State to submit an annual report to Parliament on progress of the reforms in this Bill, data on the register, breaches, use of exemption powers by the Secretary of State and penalties imposed.

NC18 (cross-party, Fell lead) - Disclosure of control of 5% or more of shares in a public company
This new clause requires any person holding 5% or more shares in a public company to declare this fact, and empowers the registrar to penalise non-compliance.

NC38 (SNP) - Bar on directors in breach of duties receiving public funds
This new clause seeks to prevent directors who fail to comply with their duties as a company director or with employment law provisions and/or tax obligations from being able to access funds in instances where these funds are for the benefit of the company and not the company’s employees.

Opposition and back bench new clauses and amendments relating to Part Two of the Bill (Partnerships)

107 (Lab) – amending clause 136 - This amendment would require the limited partnership dissolution notice to be published on the registrar’s website and remain published for a minimum of 20 years.

There are no opposition or back bench amendments or new clauses tabled relating to Part 3 of the Bill.

Wednesday 25 January – New clauses, schedules and amendments relating to parts 4, 5 and 6

Again there are a significant number of government amendments to these parts of the Bill, but there is little here that seems controversial. A majority of the government amendments are to the schedules relating to cryptoassets, and these seem to mostly be to take account of the different legal system in Scotland. New clause 14, which would allow the Law Society and any other approved regulators specified by the Lord Chancellor to obtain information to assist their regulatory functions in relation to the prevention and detection of economic crime, looks noteworthy, as do amendments 48-49, which extend protections against civil liability for information disclosure to businesses in the tax sector (among others).

However, again the focus is likely to be on the cross-party new clauses in this area. New clause 4, which would introduce a new criminal corporate offence for failure to prevent fraud, false accounting and money laundering, is particularly worth watching, given ministers’ sympathetic noises towards such an offence. Similarly new clause 6, which would introduce direct criminal liability for corporate officers who take a decision, or fail to take a decision, that knowingly results in an offence being committed. Both of these are cross-party proposals where the lead signatory is Conservative MP and former Justice Secretary Sir Robert Buckland, with Justice Committee chairman Sir Robert Neill (also Conservative) as a co-signatory.

Two more new clauses worth highlighting are new clause 1, which would strengthen protections for journalists who publish information suggesting an economic crime may have been committed, and new clause 7, which would establish an Office for Whistleblowers.

Government new clauses and amendments to Part Four – Cryptoassets

59,60,61 (gov) – amending schedule 6 – These amendments amend inserted section 131ZB of the Proceeds of Crime Act 2002 (realisation of confiscated cryptoassets) to provide that (as well as the sheriff) the High Court of Justiciary and the Sheriff Appeal Court may make an order under that section requiring confiscated cryptoassets to be realised.

62-66,71 (gov) – amending schedule 6 – These amendments amend inserted section 131AA of the Proceeds of Crime Act 2002 (destruction of seized cryptoassets) to provide that (as well as the sheriff) the High Court of Justiciary and the Sheriff Appeal Court may make an order under that section requiring seized cryptoassets to be destroyed.

67-70 (gov) – amending schedule 6 – These amendments amend section 131C of the Proceeds of Crime Act 2002 (appeals under sections 131A and 131B) to make provision for (a) prosecutors to appeal to the Court of Session against a decision of the relevant court not to make an order under section 131ZB or 131AA of that Act; (b) a person affected by an order made under section 131A, 131ZB or 131AA of that Act to appeal to the Court of Session.

72 (gov) – amending schedule 7 - This amendment amends inserted section 303Z25 of the Proceeds of Crime Act 2002 (cryptoassets: codes of practice) to provide that certain preliminary steps in relation to the making of a code of practice under that section (for example, consulting on a draft code of practice) may be carried out before that section comes into force.

73-75,79,80 (gov) – amending schedule 7 – These amendments provide that a “request for assistance” in inserted Chapters 3C to 3F of Part 5 of the Proceeds of Crime Act 2002 (cryptoassets: civil recovery) includes a request made by the Scottish Ministers to an authority exercising equivalent functions in a foreign country or a request made under section 375A or 408A of that Act.

76-78 (gov) – amending schedule 7 - These amendments provide that cryptoassets detained under any provision of Chapter 3C of Part 5 of the Proceeds of Crime Act 2002 (forfeiture of cryptoassets) (including under section 303Z31 of that Act) are subject to forfeiture under section 303Z41 of that Act.

81-86 (gov) – amending schedule 7 - This amendment and Amendments 82, 83, 84, 85 and 86 provide that where cryptoassets are detained under section 303Z31 of the Proceeds of Crime Act 2002 (seizure of cryptoassets) or paragraph 10Z7AF of Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 (seizure of terrorist cryptoassets) and are subject to an application for forfeiture, those cryptoassets are not “free property” for the purposes of the Proceeds of Crime Act 2002.

87 (gov) – amending schedule 7 - This amendment contains a consequential amendment to Part 5 of the Proceeds of Crime Act 2002. It inserts new section 311A, which includes provision about accredited financial investigators making certain applications or appeals in relation to Chapters 3C to 3F of that Part.

88 (gov) – amending schedule 7 - This amendment amends section 312(2) of the Proceeds of Crime Act 2002 (performance of functions of Scottish Ministers by constables in Scotland) to provide that all functions of the Scottish Ministers within section 271 of that Act (agreements about associated and joint property) may not be performed by constables.

89-91 (gov) – amending schedule 7 – These amendments consequentially amend section 312(2) of the Proceeds of Crime Act 2002 (performance of functions of Scottish Ministers by constables in Scotland) to provide that certain functions of the Scottish Ministers in inserted Chapters 3C to 3F of Part 5 of that Act may not be performed by constables.

92 (gov) – amending schedule 7 - This amendment consequentially amends section 453B of the Proceeds of Crime Act 2002 (certain offences in relation to SFO officers) to provide that the offences in that section apply in relation to an SFO officer who is acting in exercise of certain cryptoasset-related powers in inserted Chapter 3C of Part 5 of that Act.

93-95,99,100 (gov) - amending schedule 8 - These amendments provide that a “request for assistance” in inserted Parts 4BA to 4BD of Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 (cryptoassets: terrorism) includes a request made by the Scottish Ministers to an authority exercising equivalent functions in a foreign country or a request made under section 375A or 408A of the Proceeds of Crime Act 2002.

96-98 (gov) - amending schedule 8 - These amendments provide that cryptoassets detained under any provision of Part 4BA of Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 (seizure and detention of terrorist cryptoassets) (including under paragraph 10Z7AF of that Schedule) are subject to forfeiture under paragraph 10Z7CA of that Schedule.

Government new clauses and amendments to Part Five – Miscellaneous

NC14 (gov) - Approved regulators: information powers relating to economic crime
This new clause would allow the Law Society and any other approved regulators specified by the Lord Chancellor to obtain information or documents for exercising their regulatory functions for purposes relating to the prevention and detection of economic crime.

44,45 (gov) - amending clause 171 - These amendments modify the conditions that have to be met before an information order can be granted by a court to provide information to the National Crime Agency in a case where a request for the information has been made by a foreign financial intelligence unit.

46,47 (gov) – amending clause 172 – These amendments modify the conditions that have to be met before an information order can be granted by a court to provide information to the National Crime Agency in a case where a request for the information has been made by a foreign financial intelligence unit.

48,49 (gov) – amending clause 175 – Clause 175 restricts the civil liability of certain businesses in relation to indirect disclosure of information potentially relating to economic crime. These amendments extend the categories of business in relation to which clause 175 applies to include business in the audit, insolvency and tax sectors.

50,51 (gov) – amending clause 188 – These amendments provide for NC15 (Reports on the implementation and operation of Parts 1 to 3 of this Bill) to come into force 2 months after royal assent.

57,58 (gov) – amending clause 188 - These amendments provide for inserted section 303Z25 of the Proceeds of Crime Act 2002 (requirement to prepare codes of practice in relation to powers to search for cryptoassest-related items) to come into force on the day on which this Act is passed.

There are no government amendments or new clauses tabled relating to Part 3 of the Bill.

Opposition and backbench new clauses and amendments to Part Four – Cryptoassets

NC32 (Lib Dem) - Review of definition of cryptoassets
Requires such a review.

Opposition and backbench new clauses and amendments to Part Five – Miscellaneous

Corporate economic crime

NC4 (cross-party, Robert Buckland lead) - Offence of failure to prevent fraud, false accounting or money laundering
This new clause introduces a new criminal corporate offence for failure to prevent fraud, false accounting and money laundering, by aligning it with other corporate criminal offences. (Specifically includes tax advisers within definition of ‘relevant commercial organisations’.)

NC5 (cross-party, Buckland lead) - Identification doctrine
This new clause reforms the “identification doctrine”, so that a body corporate commits an economic crime offence where the offence is committed with the consent, connivance or neglect of a senior manager or senior managers.

NC6 (cross-party, Buckland lead) - Failure to prevent fraud, false accounting or money laundering: individual liability
This new clause introduces direct criminal liability for corporate officers who take a decision, or fail to take a decision, that knowingly results in an offence being committed.

NC40 (Lab) - Report into options for corporate liability for economic crime
Requires a report which considers the merits of different models for corporate liability in respect of economic crime

International economic crime and sanctions

NC3 (cross-party, Layla Moran lead) - Home Office review of the Tier 1 (Investor) visa scheme: publication
Within a day of the passage of this Act, the Secretary of State must publish in full the findings of the Home Office review of the Tier 1 (Investor) visa scheme which relate to economic crime.

NC23 (cross-party, Jonathan Djanogly lead) - Review of measures to prevent proceeds of economic crime entering the UK economy
This new clause creates an obligation for the Secretary of State to report to Parliament on the merits of further regulatory measures for preventing the circulation in the economy of the proceeds of economic crime controlled by individuals or entities subject to sanctions.

NC25 (Stephen McPartland (Con)) - Report into effectiveness of Act in addressing economic crime involving sanctioned individuals
Requires a review which must consider the case for further legislation to make provision for the seizing of assets of a designated person where there is evidence that they have been involved in economic crime.

NC28 (Lab) - Ukraine Compensation Fund
This new clause would require the Secretary of State to prepare and publish a strategy to facilitate the use of confiscated Russian assets to provide compensation for victims of Russian aggression in Ukraine.

NC29 (Lab) - Definition of “unlawful conduct” for the purposes of identifying proceeds of crime
This new clause would expand the scope of “unlawful conduct” under the Proceeds of Crime Act 2002 to include threats to international peace and security and serious violations of international law, thus making it easier to freeze and confiscate assets of individuals linked to such conduct

NC30 (Lib Dem) - Assets of Iranian officials obtained through economic crime
Requires review of regulatory measures to prevent the circulation in the UK economy of assets of Iranian officials which have been obtained through economic crime.

Disclosure of information

NC1 (cross-party, Liam Byrne lead) - Disclosure of information in the public interest likely to be relevant to the investigation of economic crime
This new clause would make it a defence when disclosing or publishing information to show that the disclosure or publication complained of was likely to be relevant to the investigation of an economic crime.

NC2 (cross-party, Byrne lead) - Economic crime: power to strike out statement of case for abuse of process
This new clause would enable a court to strike out any statement of case which can be reasonably understood as having the purpose of concealing, or preventing disclosure or publication of, any information likely to be relevant to the investigation of an economic crime.

NC7 (cross-party, Mary Robinson lead) - Whistleblowing: economic crime
Establishes an Office for Whistleblowers.

Resourcing and oversight of economic crime-fighting

NC31 (Lib Dem) - Fund for the purposes of tackling economic crime
Requires the setting up of such a fund.

NC33 (Lab) - Economic Crime Committee of Parliament
This new clause would oblige the Secretary of State to establish an Economic Crime Committee of Parliament to examine and oversee regulatory, enforcement and supervisory action against economic crime.

NC39 (Lib Dem) - Duty to report on economic crime resourcing and performance
This new clause places a specific duty on the Director General of the National Crime Agency to prepare an annual report on the NCA’s resourcing and performance relating to economic crime. The section stipulates the minimum information that the Director General must include in the report.

Miscellaneous

NC21 (cross-party, Hodge lead) - Civil recovery: costs of proceedings
This new clause extends the cap on adverse costs introduced by the first Economic Crime Act (Transparency and Enforcement) 2022 for Unexplained Wealth Orders, to all civil recovery orders.

NC26 (Lab) - Beneficial owners in overseas territories
This new clause would amend the Sanctions and Anti-Money Laundering Act 2018 to ensure that an Order in Council requiring open registers of beneficial ownership in the British Overseas Territories comes into force no later than 30 June 2023.

NC27 (Lab) - Compensation for Victims of Economic Crime
This new clause would require the Secretary of State to prepare and publish a strategy on the potential establishment of a fund to provide compensation to victims of economic crime.